The Canadian logistics industry is very robust as it includes a selection of companies working in trucking, freight, logistics and courier services, serving companies and individuals in Canada, North America and around the world. Given Canada’s centralized location, it has preferential access to the rest of North America, as well as the greater northern hemisphere, by rail, road, air, and shipping. There is a common link that connects the courier service with truck services, as Canada is a large country and all means of transporting goods, people and packages must be synchronized to better serve the people of Canada.
Canada’s logistics and transportation industry
Canada’s national transportation and logistics industry depends primarily on rail and truck transportation. Rail represents 30% of all logistics transport, while trucks account for up to 70%. Given the liberal nature of Canadian industry and the large geographical extent, the truck industry relies primarily on small truck companies that rely on rental operators and, in some cases, owner-operators to move goods across the country. However, there are still larger logistics companies that manage fleets with hundreds of trucks across the country. Despite the significant size of large trucking companies, none of them have a stake of more than 5% and therefore do not justify a deeper examination than their overall contribution to the overall growth of the industry.
Determinants of the truck industry in Canada
Since most small trucking companies operate similarly covering only short distances, these companies tend to cooperate whenever goods move from one corner of the country to another, over difficult terrain. Because of these short-distance coverage, these small carrier companies are extremely vulnerable to consumer spending habits, international business activity, and manufacturing. The recent Covid-19 pandemic has demonstrated the vulnerability of such an industry because it depends almost entirely on small businesses that depend on localized consumer spending.
The interaction between logistics and transport
The truck industry simply depends on truck fleets, which operate under a common code for transportation. The codes of the American classification system (NAICS), allow companies to operate on a single platform and this allows them to carry out cross-cutting logistics. Therefore, it is inevitable that warehouses will be required to handle this complex system of codes and logistics systems. The storage and warehousing industry currently employs approximately 2.2 million Canadians, and Toronto has more than 12,500 companies in the industry. This is an indication of the decentralized nature of the industry and further indicates that storage and transportation require similar systems for planning and operations.
Local courier and delivery services
Domestic courier services in Canada have relied heavily on public courier services. However, innovation and technological ingenuity have pushed private companies to operate at a higher frequency and flexibility. There are still many opportunities for local courier and delivery services, especially given the penetration of digital technologies that have replaced traditional technologies that for a long time relied on the delivery of packages, goods and letters across the country. As small businesses enter the digital space, the need for local shipping services has skyrocketed, further protecting the results of traditional logistics and courier companies.
NAICS codes also appear in messaging services. These have been instrumental in ensuring market stability, as the biggest threat to the delivery industry is the high competition stemming from the number of small businesses offering the same services. Today, SMEs have many local couriers and delivery services to choose from, allowing them to operate simply by aligning their storage systems to the transportation systems and companies they choose. The three industries, namely courier, trucking and logistics, are based even more on a rapidly changing world.
Major industry trends and issues
Technology and diplomacy offer the most dynamic changes and issues facing the local logistics and public transportation industry in Canada. The adoption of digital technology has opened up new markets and further injected the necessary efficiency, security, reliability and sustainability for which the Canadian market is known. This has also given Canadian companies a competitive advantage with the intention of expanding their networks to greater North America, establishing advanced locations in Mexico and the United States. However, threats from new entrants remain the most important risk in the industry and this is why the number of truck companies remains high, but with a very low success rate. These small truck companies operate largely as family businesses operating between two or three towns and cities.
However, diplomatic relations with Canadian neighbors have improved and this has allowed Canadian logistics and carrier companies to make inroads into the larger US market. It aims to quickly change the market landscape, giving Canadian truckers a new access to the market, but also opens them to direct competition from larger US companies, in all sectors of logistics, ie trucks, delivery, courier and logistics services in general.